Most of us is failry young here - is a forum for Financial Independence and Retire Early at the end.
Many of us though have parents that are getting older. Mine fortunately are still very active and are around 65 years old and could retire already since 5 years, which compared to the rest of the population is not bad.
My father particularly had a not so nice experience with altersheim for his father (my grandfather). He was an only child, so the grand parents donated the home with a “cession in usufruct” that ie the grandparents had still a right to use. Grandmother died in 2007 - shortly after grandpa move in my parents home where he stayed 12 years. When the time came for my grandpa to move out from my parents home (they cared for him until he was 95 (!), in 2016) he went to the village retirement home. The monthly payment for his staying were around 8000 chf, - 2300 “Deckungsbeitrag” made for around 5700 chf per month of his own cost. He was lucky he retired in 1980 with a good pension of MIGROS that adjusted the rent to cost of living and he could finance most of it. He didn’t have access to “complementary payment help” (ergänzungleistung) because of how they structured the donation to my parents. Since they kept the right to live (usufruct) the house counted towards the wealth of my grandpa, and thus blocked access to the EL because of the low mortgage. Additionaly they averaged the past 10 years rent/wealth to calculate final cost.
Basically all of this to say that my father, who is 65, is starting to think how to avoid the same mistakes and properly start decreasing wealth etc in order not to pay an astronomic amount for retirement home in ~15-20 years (based on average age of entry). He still very fit, but is already started thinking on it since they take 10 year average.
So in a way, he is “forced” now by 70 to donate away his home to his kids (or if an old person doesn’t have kids, to go and rent somewhere) so that the calculation do not screw a possible retirement home monthly cost for both him and his wife - if both get the maximum monthly cost at the same time, that is up to 12-14k per month that they would have to come up with.
All of this to open up a discussion - I don’t have specific question yet. But it did made me reconsider - is this an hidden cost of owning an home? Are all 65-70 middle class family basically forced to moe to rent in order not to pay full amount of retirement home cost? It gave me lots of things to think about. Death, taxes and all the rest …
Yes, the right to live in the house screws you over (or you children).
Best would be to just give the house to your son, make a rent contract and just not pay the rent.
Also the cost of retirement homes is astronomical, and its in their interest to keep you alive (not: alive, not well/happy) so that the can continue billing you.
Also note that the average lifespan in a retirement home is about 3 Years.
Just to confirm my understanding - Granddad’s “billed amount” was 5700 p.m… With income AHV of about 2000 and pension maybe another 2000-3000?
Of course Granddad still had to pay Krankenkasse and a few other bills.
But still, I see a monthly deficit of “only” 1000-2000.
Average time in such a place is 3 years, although can vary extremely of course.
Makes for a not-crazy amount, which could be covered by savings, no? Even in an extreme 10 years in the heim, say, makes CHF 180k.
Do I understand and calculate correctly?
I know this isn’t about your grandfather now/today, but still, you refer to it like the above was a not-so-nice/negative experience.
I’m not against state “help”, but gifting your Vermögen away at 70 so that the state can later pay your Pflegeheim, I don’t know, we have really done this differently with my parents, as my parents don’t want to depend on the state (and I don’t want that they do either), except in some extreme situation.
We are not rich, but somewhere in the middle/average.
Please understand as an open discussion / opinion exchange, not critiscm.
I suppose the only way is the greyish area of regular small undeclared payments.
Nowadays there are alternate solutions to homes: elder collocations and other shared buildings, home help, exit (which I find good if the elder has had enough, not speaking about optimizing money there)
that’s one of the things that got me thinking. Would that be ethical? Don’t think so.
@rolandinho yes you got it more or less right.
Just to be clear my parents cared for my grandfather for 12 years at home. They never went to any holiday to not leave him alone, until he required too much help to be doable by my parents. He had very unique health situation and nurses etc were always forgetting some details so he was actually best cared at home (not a critic towards the health care people - it was completely unique situation).
Because of this, they could save some of the retirement and finance the deficit when in the retirement home (where he stayed 4 years, until he died not of Covid but still alone because of restrictions in may 2020 )
So exactly right, everything went without state support and they were not really planning to circumvent them to get EL.
Nevertheless, it got my father thinking. The expected expenses are going to grow to 12-15k per month in 2035+.
I think my father just worry that it could be catastrophic, but we are just starting discussing it, so there is still time hopefully to plan a bit and reassure him. I guess is streesful to think that you maybe a financial burden for your kids if cost keep exploding.
It’s largely a question of social life and other attachments to Switzerland.
A person which does not have a very active social life in Switzerland or strong attachments to the country should seriously consider emigrating in retirement. Why decimate your wealth or figure out schemes to get government handouts when you could be living like a king in another country. Why settle for vegetating in a second-rate retirement home for 8K per month in Switzerland when you could have your own villa and private, full-time caretakers, and actively engage in social life for 2-4K per month elsewhere.
My dad moved abroad again after retiring. His AHV pension, which would not be enough to exist on in Switzerland, is equivalent to a good salary in the country he lives in. So he lives great on that alone, and saves everything else (pension fund, private savings, rents on properties). He can easily afford to come to Switzerland regularly to visit friends/family etc.
My partners dad was in a home in Switzerland, total cost was 8500 CHF per month (think he had to pay about 5K of that himself, the rest the state paid. He is Italian and moved back to Italy late last year into a home there, now total cost per month is about 1500 EUR, which he can easily cover with his Swiss pension.
Interesting topic. I was also shocked to discover that the typical Altersheim costs 9’000 CHF per month, and 6’000 you cover yourself. I didn’t know there are some further discounts depending on your wealth.
My grandma is an old people’s home since +/- 2016 in Poland, and there these costs are significantly lower. My mom pays 1’000 CHF. Although I have to say that the conditions are not comparable to Switzerland. The place is clean, they are well fed and have activities, but the place is modest, and there are 2-3 people staying in a single room. But since most of them are in almost vegetative state, demented, not knowing their name or where they are, I don’t think it matters that much.
I wonder how many old people in Switzerland actually consider going abroad to live off their last few years. Personally, I hope before it happens to me, I will be still mentally sharp enough to “pull the plug” on myself
This is of course interesting, because Switzerland is one of the few countries where you can “pull the plug” fairly easily (exit etc) something I think would be much more difficult in Poland for instance. You can still come ti Switzerland but you would need somebody to help and organise.
In the case of my grandfather, he was mentally extremely sharp - and still enjoyed eating, seeing us, playing cards and was solving multiple crosswords per day. But he still needed proper facilities and 24/7 care. Exit was not really an option, neither staying home with my parents.
Imagine you’re 50 years old and ready to FIRE with 2.5 million in assets. Now your parents have to go to a nursing home and they only have a small pension of 5-6k/month. Nursing home costs 15k/month for both of them. As you have a lot of wealth you’ll be forced to cover the missing 9-10k/month.
This is a risk that shouldn’t be ignored in Switzerland.
But what if you’re in the middle of your FIRE journey with 1-1.5 million in assets and not yet ready to stop working? Or you still have kids that are in school? If your parents need the nursing home till you are 65, you’ll never going to retire with more than 500k in assets and not earlier anyway.
this is an interesting topic.
If I’m right they account for the “taxable value” of your NW.
I’m wondering if you can buy real estate with debt to keep your NW below the threshold.
Or alternatively buy-in in your 2nd pillar, that is not accounted in nw. But this will work only up to a lower amount.
Both methods comply with the law.
Before we get all excited, has anyone actually done the calculations?
Based on the link Erma posted for canton Aargau, this might not be that much:
They seem to compare your income + wealth against a lifestyle of 15’000 CHF per month (couples, 10’000 CHF individual), and only ask for contributions if your income + wealth is above that. If you already fired you will probably fall below that threshold.
Let’s assume a NW of 2’500’000 CHF, of which 600’000 are in 2nd & 3rd pillar. Of the remaining, depending on canton, we can deduct a tax free amount, lets assume this is 100’000. This leaves us with a taxable NW of 1’800’000 CHF. Of this we now knock off 500’000 (couples), and apply the ‘yearly consumption’ ratio from Erma’s link.
Assume we are ~45 years old this would get us to 32’500 CHF yearly NW contribution to the income. Add some dividend income, and we’re still far off the 12 x 15’000 CHF threshold. Zero contributions to welfare requested…
So a single person between 51-60 has to earn more than 10k per month. That’s 120k x 30 + 250k = 3.85 million in net worth if retired.
But what if you are 51, have a gross salary of 200k and 2 million in net worth? That’s 258k which they will count and so 138k above the “gehobener Lebensführung”. They will come for 69k/year?
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, tu confirmes avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
)
